Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 27, Problem 4SPA
To determine
Identify the impact of cut in the quantity of money on aggregate demand in the short-run.
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The slope and position of the long-run aggregate supply curve
Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply.
The size of the labor force
The level of technological knowledge
The price level
The quantity of physical capital
why the short run aggregate supply curve has a positive slope and the long run supply curve a vertical line.
Please fully explain
The short-run aggregate supply curve shows how ________ cause output to rise.
Answer
A. increases in inflation
B. decreases in unemployment
C. decreases in nominal interest rates
D. All of these
E. None of these
Chapter 27 Solutions
Macroeconomics
Ch. 27.1 - Prob. 1RQCh. 27.1 - Prob. 2RQCh. 27.1 - Prob. 3RQCh. 27.1 - Prob. 4RQCh. 27.2 - Prob. 1RQCh. 27.2 - Prob. 2RQCh. 27.2 - Prob. 3RQCh. 27.3 - Prob. 1RQCh. 27.3 - Prob. 2RQCh. 27.3 - Prob. 3RQ
Ch. 27.3 - Prob. 4RQCh. 27.4 - Prob. 1RQCh. 27.4 - Prob. 2RQCh. 27.4 - Prob. 3RQCh. 27 - Prob. 1SPACh. 27 - Prob. 2SPACh. 27 - Prob. 3SPACh. 27 - Prob. 4SPACh. 27 - Prob. 5SPACh. 27 - Prob. 6SPACh. 27 - Prob. 7SPACh. 27 - Prob. 8SPACh. 27 - Prob. 9SPACh. 27 - Prob. 10APACh. 27 - Prob. 11APACh. 27 - Prob. 12APACh. 27 - Prob. 13APACh. 27 - Prob. 14APACh. 27 - Prob. 15APACh. 27 - Prob. 16APACh. 27 - Prob. 17APACh. 27 - Prob. 18APACh. 27 - Prob. 19APACh. 27 - Prob. 20APACh. 27 - Prob. 21APACh. 27 - Prob. 22APACh. 27 - Prob. 23APACh. 27 - Prob. 24APACh. 27 - Prob. 25APACh. 27 - Prob. 26APA
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- Assuming a stable short-run supply curve, what will happen if there is a shift in aggregate demand? a) Profits and output increase in the long-run. b) Unemployment decreases in the long-run. c) Profits and output decrease in the short-run. d) Unemployment increases in the short-run. e) Unemployment and prices move in opposite directions in the short-run.arrow_forwardWhat happens to the aggregate demand curve when the Fed reduces the money supplyarrow_forwardHave you ever borrowed money to buy a car, pay tuition, or for any other purpose? In what form did you receive the money? How did your loan affect the money ? Aggregate demandarrow_forward
- The graph shows the long-run aggregate supply (LRAS), short-run aggregate supply (SRAS), and aggregate demand (AD) curves for a given economy. Manipulate the curves to show the short-run effect of an increase in money supply. Look at images to solve for thisarrow_forwardExplain how an increase in a price level will affect the demand for money and the aggregate demand. Use relevant graphs to support your answer.arrow_forwardassume there is a huge pandemic and the US Gov’t requires lockdowns that close many businesses and restrict the operations of many others (think 2020 in the US). What will be the impact on Aggregate Demand.arrow_forward
- Distinguish between “real-balances effect” and “wealth effect,” as the terms are used in this chapter. How does each relate to the aggregate demand curve?arrow_forwardExplain the difference between long run and short run aggregate supply. Why do economists distinguish between the two?arrow_forwardHow does an increase in aggregate demand affect output, unemployment, and the price level in the short run?arrow_forward
- Explain whether each of the following events shifts the short-run aggregate supply curve, the aggregate demand curve, both, or neither. Draw a diagram to show what happens to output and the price level in Pakistan, assuming policymakers take no action. The Karachi stock market declines sharply, reducing consumers’ wealth. A severe Flood damages factories along the Indus River. Pakistan experiences a wave of immigration A boom overseas causes foreigners to buy more Pakistan goods. State Bank of Pakistan increases the policy rate (Interest rate).arrow_forwardThe graph below shows the long-run aggregate supply (LRAS), the short-run aggregate supply (SRAS), and aggregate demand (AD) curves for a given economy. Manipulate the curves to show the long run effect of an increase in money supply. In the long run, an increase in the money supply will result in the following.arrow_forwardIf the long run macro aggregate supply curve is vertical, and there is no additional shock to the economy, then an increase in government spending _______________________ . Group of answer choices decreases aggregate output in the short run decreases aggregate output in the long run increases aggregate output in the long run does not affect aggregate output in the long runarrow_forward
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